Gannet Co. proposed to acquire Tribune Publishing Co. in a deal valued at
about $400 million, as the owner of the USA Today seeks to add the Los
Angeles Times and Chicago Tribune to its portfolio of newspapers in a
rapidly consolidating industry.

The offer values Tribune shares at $12.25 each in cash, a 63% premium to
their closing price Friday. Gannett said that when including the assumption
of Tribune’s debt, the deal has an overall value of $815 million.

Tribune, in a news release, said it told Gannett it would seek financial
and legal advisers to assist it in reviewing Gannett’s proposal. Tribune,
which said it was still focused on its organizational changes, said it has
started a review of Gannett’s proposal and would “respond to Gannett as
quickly as feasible.”

A Tribune Publishing representative was unavailable for further comment
Monday.

Gannett had said in its news release that it has been disappointed with
Tribune Publishing’s response to its proposal made April 12 and frustrated
with its “refusal to begin constructive discussions with us.”

A deal would tie household news outlets such as Gannett’s USA Today and
Tribune’s Los Angeles Times under one firm, as newspaper companies have
struggled in recent years, in part from disruptions caused by the Internet.

Gannett’s proposal comes amid a frenzy of newspaper industry deals, as
bigger players look for the economic advantages of scale in a business
under pressure on multiple fronts, and scout for bargain opportunities.

Gannett is already the largest publisher, with 12% of U.S. newspaper daily
circulation, according to the Alliance for Audited Media. Digital First
Media has 8%, News Corp has 6% and Tribune Publishing has 5%. Last year, 70
daily newspapers changed hands in 27 transactions for $827 million, the
highest total for the industry since the 2008 economic crisis, according to
data compiled by merger-and-acquisition adviser Dirks, Van Essen & Murray.

“The combined organization would offer Tribune employees a broad range of
advancement opportunities within a larger organization with the financial
strength to meet the industry challenges we all face,” Gannett Chief
Executive Robert J. Dickey said in a written statement.

Gannett said it can quickly consummate a transaction without any financing
conditions and without threatening the tax-free treatment of Tribune’s
recent spinoff transaction.

Tribune Publishing was spun off in late 2014 as a separate company from
broadcast holdings that became Tribune Media, less than two years after
their predecessor company emerged from bankruptcy.

Since then, Tribune Publishing has struggled, with its stock price tumbling
69% since the spinoff, from $24.50 a share to $7.52 at market close on
Friday. The company has reported declining year-over-year revenues in
almost every quarter since the spinoff as it struggles with a sharp
industrywide falloff in advertising dollars as readers and marketers
migrate online.

Gannett, meanwhile, is considered one of the newspaper companies in the
strongest position to hunt for acquisitions as struggling rivals look to
exit. The company, whose assets include USA Today and 92 mostly medium- and
small-market papers, also split off from its broadcast properties and
signaled last year that it is in the market for acquisitions in markets
with populations between one million and three million people.

Gannett’s stock has risen roughly 5.4% to $15.77 since June 2015, when its
publishing assets were spun off to form a debt-free publicly trading
company, which kept the Gannett name.

Gannett’s annual revenue last year slipped 9% to $2.89 billion, while
Tribune’s operating revenue fell about 2.1% to $1.67 billion in 2015.

For Tribune Publishing, the past several months have been especially
turbulent.

Last summer, Tribune Publishing rejected overtures from philanthropist Eli
Broad and private equity-firm Apollo Global Management to sell the Los
Angeles Times, its largest revenue generator. The process led to the ugly
firing of the paper’s publisher, Austin Beutner, and elicited a letter from
at least one major shareholder to the board urging it to break up the
company or move to make it private.

Speculation about Tribune Publishing being in talks to sell itself was
triggered in November, when Rupert Murdoch, executive chairman of News Corp
and 21st Century Fox, said on Twitter that there was “strong word” Tribune
Publishing was to be bought by a big Wall Street firm.

At the time it was reported that private-equity firm Apollo Global
Management had approached Tribune Publishing about a sale. The Wall Street
Journal reported that the bid didn’t result in talks.

In February Tribune Publishing’s upper ranks went through a shake-up when a
new investor provided a substantial cash infusion. Merrick Media LLC, which
is owned by Chicago-based investor Michael W. Ferro Jr., paid $44.4 million
for 16.6% of the company’s shares, becoming the largest shareholder. Mr.
Ferro became nonexecutive chairman, replacing Eddy Hartenstein.

Less than three weeks later, Jack Griffin departed as CEO and was replaced
by Justin Dearborn, a longtime associate of Mr. Ferro who previously was
chief executive of Merge Healthcare Inc., a health-records and imaging
company that International Business Machines Inc. acquired. Mr. Griffin had
been brought in as CEO of Tribune Publishing in 2014 to help orchestrate
the publishing company’s spinoff.